We are Rolling the Dice on this One…
Long term Creso Pharma (ASX:CPH) shareholders have had a rough ride in the last 12 months.
Following a failed $122M acquisition in June 2019, CPH was forced to seek dilutive funding arrangements to survive. This included convertible notes that damaged the share price to the point where it finds itself today.
Last week the $20M capped CPH raised circa A$9M at $0.0291 per share, finally extinguishing the company’s debt and ridding the company of major con note holders that were hampering any share price appreciation.
While not without risk, we have decided to invest in the CPH placement at 2.91c - roughly its current trading price. We think this could be the low point.
The company’s debts are paid, cash is in the bank, and any stale holders, plus the con note holders, appear to have largely exited over recent days.
In this current hot market, we think there could be upside in CPH in the next couple of months.
Our intent is to see how the company’s strategy plays out.
CPH has substantially trimmed its operating costs, continues to generate revenue from its Canadian growing facilities and it has brought on a high-profile medical cannabis maverick, Bruce Linton as a strategic advisor.
Linton was the founder and CEO of Canopy Growth (TSX: WEED | NYSE: CGC), building that company from a fledgling start up into a US$15BN market cap powerhouse at its peak.
At one stage Canopy was one of the biggest medical cannabis stocks on the planet. We are curious to see what value Linton can bring to CPH holders.
Following our recent investment, we are looking for CPH to deliver significant share price appreciation from here.
However, this is an ASX small cap stock, and there is no guarantee our investment will be successful. Remember at this end of the market, only invest what you can afford to lose.
As we indicated above, the last few days of trading have seen significant volumes in CPH, and we think that now, the con note holders have largely exited the building.
CPH has emerged with a much stronger balance sheet, providing fresh air for any share price catalysts that could come.